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Hospitals are bracing for an increase in unpaid medical bills and related uncompensated care after the Republican-led Congress let funding for the Children’s Health Insurance Program lapse.

Congressional committees this week are working on language to renew the CHIP program after federal funding expired Saturday, Sept. 30, leaving coverage of 9 million children in doubt. What was thought to be a done deal with bipartisan agreement a month ago that CHIP would be renewed for five years has lately become bogged down in Congressional gridlock and charges of ineptitude against Republicans and the Trump White House.

“States will not have access to additional funds and either will have to scramble to find money to pay for the health care costs for some of the most vulnerable patients or hospitals likely will experience a surge in uncompensated care,” Mizuho Securities USA research director Sheryl Skolnick said in a report Wednesday. “The need to reauthorize CHIP was well-known and the failure seems symptomatic of the larger issue of a dysfunctional political process.”

Some states could begin to run out of money to cover children over the next three months, triggering an uptick in medical bills that could lead to layoffs and a freeze on capital spending.

Hospitals generally account for CHIP funds in their Medicaid revenues, which can be 10% and 20% of some facility revenues. For-profit hospital operators like Tenet Healthcare, HCA Holdings and Community Health Systems, though, have less than 10% of their operations funded by Medicaid, Mizuho’s report this week shows.

Since the Affordable Care Act expanded coverage to more than 20 million Americans, hospital charity care and related uncompensated care expenses that include bad debt have dropped significantly.

But a loss in money from millions of children covered by CHIP would reverse the uncompensated care trend and certainly hit hospitals hard.

The healthcare industry was still hopeful momentum would return in Congress and CHIP funding would be renewed before providers and their patients would be harmed.

"Given CHIP’s immensely positive impact on children’s health, MHPA is very gratified that the House language released on Monday, October 2 extends the CHIP funding for another five years,” Medicaid Health Plans of America said in a letter to Congress. “We also appreciate that the language acknowledges any changes to funding must be made carefully and over time by gradually reducing the temporary 23 percent increase to 11.5 percent in October 2019, before allowing the program to resume the regular CHIP funding in October 2020. MHPA also appreciates that the funding, once extended, will be retroactive thus ensuring states’ current budgets will not be negatively affected."